U.S. tariffs pose "significant risks" to economy, says German central bank chief

A monitor displays stock market information on the floor of the New York Stock Exchange in New York, the United States, on Feb. 3, 2025. (Photo by Michael Nagle/Xinhua)

As an export-driven economy, Germany will suffer substantial losses due to the shift in U.S. trade policy, Nagel said.

FRANKFURT, Feb. 17 (Xinhua) -- The German Bundesbank President Joachim Nagel, warned on Monday that U.S. tariffs would have a particular impact on Germany, posing "significant risks" to the country's economic growth.

Speaking at the Speaker's Luncheon of the Union International Club in Frankfurt, Nagel stressed that as an export-driven economy, Germany will suffer substantial losses due to the shift in U.S. trade policy.

Referring to U.S. President Donald Trump's imposition of 25-percent tariffs on steel and aluminum, Nagel noted that this move would particularly impact Germany, posing a threat to its economic outlook.

Citing projections from Germany's central bank, Nagel warned that escalating transatlantic trade tensions could lead to Germany's economic output in 2027 being 1.5 percentage points lower than expected. He also cautioned that inflation could rise, although the exact impact remains uncertain.

This photo taken on Dec. 16, 2024 shows the German Bundestag in Berlin, Germany. (Xinhua/Du Zheyu)

The Bundesbank chief further highlighted that increased tariffs risk creating a "self-inflicted economic headwind" that might not only weaken Germany's economy but also undermine America's own growth prospects while disrupting global supply chains.

"The erosion of purchasing power and the surge in input costs would far outweigh any potential competitive advantages for U.S. industries," he said. "The inflation rate would rise sharply and could climb even higher without a significant tightening of monetary policy."

Contrary to the U.S. administration's claims, Nagel asserted that tariffs would likely have negative consequences for the United States as well.

"Protectionism leads to welfare losses in all affected countries. There are no winners," Nagel concluded, reaffirming his commitment to advocating for an open and rules-based trading system.

Vehicles are seen at a car dealership of Volkswagen in Berlin, capital of Germany, May 7, 2020. (Photo by Binh Truong/Xinhua)